China’s electric vehicle giant BYD has been on a tear in Southeast
Asia, shooting past rivals, including Tesla to take more than a quarter of the
share of EVs sold in the region.
Along with attractive prices, BYD’s early success is based on a
pattern of distribution partnerships with large, local conglomerates that have
allowed the carmaker to expand reach, test consumer preferences and navigate
complex government regulations in the region, said officials from three
partners and analysts.
This partnership model, similar to that pursued by Japanese
automakers in some Southeast Asian countries decades ago, is helping BYD to
build market share rapidly and contrasts with Tesla’s go-it-alone distribution,
though it comes at a cost.
“At present, BYD’s primary focus is on brand proliferation rather
than optimising profit margins,” said Counterpoint Research senior analyst Soumen
Mandal.
“By providing local dealers with more lucrative profit margins, BYD
can cultivate trust and loyalty, paving the way for broader expansion.”
BYD did not respond to questions from Reuters.
The Chinese automaker sold more than 26 per cent of all cars in
Southeast Asia’s small but fast-growing EV market in the second quarter of 2023
and its Atto 3 model, priced starting at $30,000 in Thailand, was the regional
bestseller, according to Counterpoint.
Tesla prices the most basic Model 3 from about $57,500 in Thailand.
EVs constituted 6.4 per cent of all passenger vehicle sales in
Southeast Asia in the second quarter, up from 3.8 per cent in the preceding
quarter, and the region could gain in importance for Chinese automakers after
the European Commission last week announced an investigation into Beijing’s EV
subsidies.
‘NOT AN EASY MARKET’
BYD’s regional distributors include divisions of Sime Darby in
Malaysia and Singapore, Indonesia’s Bakrie & Brothers, Ayala Corp in the
Philippines and Thailand’s Rever Automotive.
BYD’s partnerships are helping it in a region where Chinese car
brands do not have an established track record, said Chee-Kiang Lim, managing
director for China at auto sales consultancy Urban Science.
“If buyers are unsure or have any concerns, partnering with
established players like Sime Darby, Bakrie & Brothers, or Ayala Corp will
give them the peace of mind, especially for aftersales support,” he said.
The Shenzhen-based automaker is investing nearly $500 million in
Thailand to build a new factory that will produce 150,000 EVs per year from
2024 for exports to Southeast Asia and European markets.
For Ayala Corp’s AC Motors, which plans to open a dozen BYD
dealerships in the next 12 months in the Philippines, the focus for initial
spending is on brand building and getting more consumers considering EVs, said
the head of its automotive business, Antonio Zara. “It’s about busting the
myths on range,” he said.
“It’s about busting the myth on price and communicating the total
cost of ownership.”
In Thailand, an advertising spree is visible from small screens
inside elevated trains in the capital Bangkok to massive billboards in
provincial towns. BYD’s Thai partner Rever did not respond to questions on its
distribution and marketing strategy.
In Indonesia, BYD has able to lean on Bakrie & Brothers’ unit
VKTR to secure a government contract for 52 EV buses for Jakarta, said its
chief strategy officer Alex Kim.
“Indonesia is not an easy market to do business on your own,” said
Kim, adding that, beyond government sales, VKTR was in talks with large
domestic businesses to sell BYD EV buses.
TAKING ON TESLA
Thai EV buyers contributed 24 per cent of BYD’s overseas sales in
the second quarter, making it the Chinese automaker’s largest foreign market,
according to Counterpoint, whereas fewer than 1 per cent of Tesla’s sales are
in Southeast Asia.
Tesla’s website currently lists only two stores in the region, both
in the wealthy city-state of Singapore, though it is hiring for Thailand and
Malaysia.
BYD’s Southeast Asia playbook and its embrace of dealerships
contrasts with Tesla, whose direct-to-consumer approach is hard to replicate,
since no other new EV brand has its buzz or the outsized media presence of its
CEO Elon Musk.
BYD and its partner Sime Darby Motors are experimenting with a new
approach to draw young, tech-savvy consumers towards the Chinese brand in
Singapore.
The partnership has launched five “BYD by 1826” showrooms that
double as white-tablecloth restaurants where dishes are named after BYD EV
models.
“With BYD by 1826, we are able to reach out to more customers who
want to know more about BYD or (are) new to the BYD brand,” said Jeffrey Gan,
managing director of retail and distribution for Sime Darby Motors in Southeast
Asia, Hong Kong and Macau.
Reuters
